The farmers, who for want of money will hedge cotton, are sure to find it impossible to meet obligations relating to daily clearing and margins. Similarly, the export-houses which are having valid export contracts will feel disgusted at the cumbersome procedures of daily clearing and margins. Up country traders will find really difficult to make payments to the clearing house on a daily basis. Export-houses in general are kept out of the purview of the margins. The legal opinion in this cases is that payments within a week is valid for ready delivery contracts.

Here in futures, it would prove cumbersome for traders to comply with the daily pay in or pay outs. Postal delays and the regular five day period taken for cheque clearances will kill the initiative of daily clearing. It is, though essential for daily clearing and smooth running of the contract, not at allpractical here. This will keep out farmers, small upcountry traders and exporters out of the facility of hedge trading.

The fixation of the daily maximum fluctuations limit at Rs 150 per 100 kg is finding favour with the traders so that unbridled speculative activity will remain in check. Calculating on the basis of current price of 26 mm length cotton at Rs 19,000 per candy, the quoted price of 100 kg comes to Rs 5,340. The limit will not hinder smooth running of the contract.

Even the running of three contracts at a time will create confusion. Activity in distant contracts initially will be limited. It is expected to attract hectic switch over activity only at the time of maturity of the current contract. Two contracts running at a time will be sufficient enough for the market.

Traders call for clear-cut classifications of clearing members, clearing-cum-trading members and trading members. Deposit amount of Rs 2.5 to Rs 25 lakh is sufficient enough to take care of any excessive speculativeactivity.

Undue delay in starting futures trading has disappointed the trade. It is essential that acceptable formulae be evolved soon between traders and the Forward Markets Commission. It is argued that the traders have no grievances in conducting New York feature trading illegally. Even now, illegal trading at various cotton growing states for different varieties has been going on and the FMC is unable to stop.It is a pity that those who are willing to do legal business,have been subject to the whims and fancies of the Forward Markets Commission.

Recently the finance minister Yaswant Sinha asserted that the central government is committed to dismantle inspector raj. It will be in best interest of the trade, farmers and export-houses that a solution to disputed points be found out as the FMC is expected to act as a liaison between trade and the government and highly receptive to various suggestions and practical requirements of the industry.